Annotated GST Act – Chapter 4 – part 4-7 – Special rules mainly about returns, payments and refunds – Divisions 162 – 171

Division 162 – Payment of GST by instalments

162.1   What is this Division about

Subdivision 162A – Electing to pay GST by instalments

162.5   Eligibility to elect to pay GST by instalments

162.10 Your current GST lodgement record

162.15 Electing to pay GST by instalments

162.20 Elections by representative members of GST groups

162.25 When you must make your election

162.30 Duration of your election

Subdivision 162B – Consequences of electing to pay GST by instalments

162.50 GST instalment payers

162.55 Tax periods for GST instalment payers

162.60 When GST returns for GST instalment payers must be given

162.65 The form and contents of GST returns for GST instalment payers

162.70 Payment of GST instalments

162.75 Giving notices relating to GST instalments

162.80 Certain entities pay only 2 GST instalments for each year

162.85 A GST instalment payer’s concluding tax period

162.90 The effect of incapacitation or cessation

162.95 The effect of changing the membership of GST groups

162.100 General interest charge on late payment

162.105 Net amounts for GST instalment payers

162.110 When payments of assessed net amounts must be made – GST instalment payers

Subdivision 162C – GST instalments

162.130 What are your GST instalments

162.135 Notified instalments amounts

162.140 Varied instalment amounts

162.145 Your annual GST liability

Subdivision 162D – Penalty payable in certain cases if varied instalment amounts are too low

162.170 What this Subdivision is about

162.175 GST payments are less than 85% of annual GST liability

162.180 Estimated annual GST amount is less than 85% of annual GST liability

162.185 Shortfall in GST instalments worked out on the basis of estimated annual GST amount

162.190 Periods for which penalty is payable

162.195 Reduction in penalties if notified instalment amount is less than 25% of annual GST liability

162.200 Reduction in penalties if GST instalment shortfall is made up in a later instalment

162.205 This Subdivision does not create a liability for general interest charge

Division 165 – Anti-Avoidance

165.1   What this Division is about

Subdivision 165A – Application of this Division

165.5   When does this Division operate?

Cases

Commissioner of Taxation v Unit Trend Services Pty Ltd [2013] HCA 16 – the GST benefit of the taxpayer was not attributable to the making of a choice, election, application or agreement (collectively a “choice) that is expressly provided for by the GST Act – at [50]: the question is to be addressed by the statutory construction of the words “not attributable” and the phrase is concerned with whether the GST benefit in question, which (ex hypothesis) has been got from the scheme, is not one to which the exercise of a statutory choice has entitled the taxpayer (Case analysis)

VCE and Commissioner of Taxation [2006] AATA 682 – at [65]-[77]: “whether GST benefit attributable to the making of a choice, election, agreement provided under the GST Act”, registration for GST an election but the GST benefit was not attributable to the act of registration, registration on accruals basis not a choice or election – at [78]-[80]: whether GST benefit the “sole or dominant purpose” or “principal effect” of the scheme – at [133]: taking into account all the criteria in s 165.15, reasonable to conclude that the entity entered into or carried out the scheme with the sole or dominant purpose of getting a GST benefit

International Cases

The University of Huddersfield Higher Education Corporation v Revenue & Customs [2016] EWCA Civ 440 – whether a VAT-saving scheme is invalidated by reason of the EU principle of abuse of rights – whether the transactions resulted in an accrual of a tax advantage which would be contrary to the purpose of the VAT Code – whether the essential aim of the transaction was to establish a tax advantage

Revenue & Customs v DPAS Limited [2015] UKUT 585 – exemption – whether dental payment plan administrator provided services to patients for consideration – whether services exempt transactions concerning payments or transfers or standard rated debt collection – whether to refer questions to CJEU or stay case pending decision in Bookit II and NEC – if exempt whether change in contractual arrangements from 1 January 2012 abuse of law – appeal allowed in part and stayed – first instance – [2013] UKFTT 676

Revenue and Customs v Pendragon plc [2015] UKSC 37 – whether a scheme relating to demonstrator cars used by retail distributors for test drives and other internal purposes whereby input tax credits could be recovered on the purchase of the car but output tax was voided when the car was sold second hand to a consumer was an abuse of law – discussion of the application of the principle of abuse of law to tax avoidance schemes – whether the essential aim was to obtain a tax advantage

Education Administration Limited v Commissioner of Inland Revenue [2010] NZHC 663 – anti-avoidance

Glenharrow Holdings Ltd v CIR [2008] NZSC 116 – second hand goods, input tax credit, anti-avoidance

Weald Leasing Ltd v Revenue & Customs [2007] UKVAT V20003 – VAT – AVOIDANCE – Abuse of rights – Appellant associate of exempt trader purchasing assets to lease to separate company to lease on to exempt trader – Associate outside VAT group – Associate credited with input tax on purchases – Insertion of separate company avoided direction under VATA 1994 Sch 6 para 1 – Purpose of transaction to avoid or defer VAT of exempt trader – Halifax ECJ [2006] STC 919 considered – Purpose of legislation – Whether transactions contrary to purpose – Redefinition of transactions if abuse – Appeal allowed

Ch’elle Properties (NZ) Limited v Commissioner of Inland Revenue [2007] NZCA 256 – anti-avoidance – application for leave to appeal denied – [2007] NZSC 73 – first instance – [2005[ NZHC 190

Principal and Fellows of Newnham College in the University of Cambridge v Revenue and Customs [2008] UKHL 23; [2008] 2 All ER 863; [2008] 1 WLR 888 – anti avoidance, licence to occupy library, meaning of ‘occupation of land’

Rulings and Determinations

GSTR 2010/1 – Austlii – Goods and services tax: application of Division 165 of a New Tax System (Goods and Services Tax) Act 1999 where a land owner engages the services of an associate to arrange construction of residential premises for lease under an arrangement  described in Taxpayer Alert TA 2009/5

GSTR 2005/5 – Austlii – Goods and services tax: arrangements of the kind described in Taxpayer Alert TA 2004/8: use of the Going Concern provisions and the Margin Scheme to avoid or reduce the Goods and Services Tax on the sale of new residential premises

GSTR 2005/4 – Austlii – Goods and services tax: arrangements of the kind described in Taxpayer Alerts TA 2004/5 and TA 2004/7: use of the Grouping or Margin Scheme provisions of the GST Act to avoid or reduce the Goods and Services Tax on the sale of new residential premises

GSTR 2005/3 – Austlii – Goods and services tax: arrangements of the kind described in Taxpayer Alert TA 2004/9 – exploitation of the second-hand goods provisions to obtain input tax credits

GSTR 2004/3 – Austlii – Goods and services tax: arrangements of the kind described in Taxpayer Alert TA 2004/2: Avoidance of GST on the sale of new residential premises

165.10 When does an entity get a GST benefit from a scheme?

Cases

VCE and Commissioner of Taxation [2006] AATA 682 – at [40]-[50]: definition of “scheme” – at [50]: scheme to be identified without reference to purpose until s 165-(1)(c) considered – at [54]-[63]: when entity “gets a GST benefit from a scheme”, consideration of counterfactuals and what reasonably would be expected to occur apart from the scheme

165.15 Matters to be considered in determining purpose or effect

Cases

VCE and Commissioner of Taxation [2006] AATA 682 – at [82]: consideration of matters in paragraphs (a)-(l), reflects Part IVA of ITAA and other than (k) and (l) expressed in objective terms and are not linked to entity’s subjective intention or purpose – at [90]: paragraphs (k) and (l) may extend to subjective purpose

Subdivision 165B – Commissioner may negate effects of schemes for GST benefits

165.40 Commissioner may make declarations for purposes of negating avoider’s GST benefits

Cases

VCE and Commissioner of Taxation [2006] AATA 682 – at [134]: the use of the word “may” is consistent with a conclusion that the Commissioner has a discretion to make a declaration – at [135]-[136]: consideration of limits of discretion, input tax credit not a bounty but an alleviation of the burden borne in paying for goods and services – at [137]-[138]: appropriate to exercise discretion, the burden of GST and its alleviation did not fall as the GST Act intended because of the scheme

165.45 Commissioner may reduce an entity’s net amount or GST to compensate

165.50 Declaration has effect according to its terms

165.55 Commissioner may disregard scheme in making declarations

165.60 One declaration may cover several tax periods and importations

165.65 Commissioner must give copy of declaration to entity affected

Division 168 – Tourist refund scheme

168.1   What this Division is about

168.5   Tourist refund scheme

168.10 Supplies later found to be GST-free supplies

Division 171 – Customs security etc

171.1   What this Division is about

171.5   Security or undertaking given under section 162 or 162A of the Customs Act

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